British energy company Centrica said Thursday that it has agreed to purchase a 25-percent stake in a shale gas exploration area, becoming the first major to move into the country's shale sector.
Centrica said in a statement that it would pay £40 million in cash to peer Cuadrilla Resources and Australian firm AJ Lucas to become an investment partner in the Lancashire Bowland licence area.
It has also committed another £60 million in exploration and appraisal costs.
Cuadrilla is one of a small number of companies exploring Britain's shale gas potential and estimates there are huge supplies in its licensed areas.
The Bowland licence is operated by Cuadrilla, and three exploration wells have been drilled to date. The data obtained from drilling these three wells has confirmed the shale formation thickness and the presence of natural gas.
"With North Sea gas reserves declining and the UK becoming more dependent on imported gas supplies, it is important that we look for opportunities to develop domestic gas resources, to provide affordable sources of gas to our customers, and to deliver broader economic benefits to the UK," said Mark Hanafin, managing director of Centrica's international upstream business.
"The government's clear commitment to developing the UK's shale gas industry is creating the right environment for companies to invest and to deliver those benefits.
"This transaction presents an attractive opportunity for Centrica to explore the potential and commercial viability of natural gas from shale in the UK, while utilising its expertise as a responsible operator and developer of UK gas resources."
Initial data suggested that there could be 200 trillion cubic feet of gas within the Bowland licence area, but said more drilling was required to establish whether the discovery is commercially recoverable, according to Centrica.
Canada and the United States have produced large quantities of shale gas and oil, transforming their energy sectors. However, no shale gas has yet been produced in Britain.